The last three years has seen a surge in the number of well-known companies being fined heavy penalties for failing to act on reports of misconduct within their organisation. Even for corporations that have FCPA-approved compliance programmes or have engaged the ‘big four’ for their auditing and accounting services, the task of closely monitoring illicit conduct in their organisations appears to be a huge hurdle as fines continue to double in amount year on year.

For companies with a presence in the United States this is a big concern because, even with the proliferation of anti-bribery and anti-corruption compliance solutions readily available on the market today, companies still fall prey to the Department of Justice and Securities and Exchange Commission for Foreign Corrupt Practices Act–related violations.

Many companies have been fined a fortune for simply not acting on reports placed by tipsters on their ethics lines. Failing to follow up on the smallest reports of misconduct has ruined the reputations of several major global brands.

So, what exactly is happening?

Studies and past examples have shown that tipsters are generally discouraged from reporting illegal activities because they feel insecure. Even in companies with well-established cultures of ethics, whistleblowers are afraid to report for fear of retribution. And the chance of them reporting is even less if the reporting system involves talking to another human being.

However, if the reporting system makes them feel secure and anonymity is guaranteed, whistleblowers are highly likely to report.

This is where artificial intelligence (AI) comes in. With AI getting integrated in our daily lives, coupled with ever-developing handheld technologies, there has been an explosion of mobile apps, tools, systems, products and solutions that are using the power of AI to enhance the way we do things.

For example, medical centres in developing countries are using AI-powered apps to assess patients’ conditions to help them prescribe the right treatment. It has been found that patients generally feel uncomfortable speaking to a physician through a telephone helpline, especially when the ailment is of a private nature. This has led to more medical centres deploying app-based helplines manned by conversational chatbots that can sustain a conversation like a human being would.

The future of misconduct reporting

App-based hotlines or helplines can be more reliable and user-friendly than those serviced by human beings. For the compliance industry, this provides an exciting opportunity to maximise security, anonymity and confidence among potential whistleblowers by changing the way misconduct reports are received and managed. Now is the time for the entire industry to ditch human-serviced telephony ethics lines and move to app-based ethics hotlines manned by chatbots.

Picture this: your junior accounting executive has discovered several irregular pay-outs to a local government official in a high-risk country who has been helping your company obtain governmental contracts. However, the junior executive is unlikely to report this irregularity to the chief compliance officer because she is scared that she may be dismissed. Imagine how much more likely she would be to make the report if she could download a free app on her smartphone and make the report from the comfort of her home, without ever having to talk to anyone in the company?

Advantages of app-based hotlines

Accessibility

As highlighted in the example above, app-based reporting systems are far more accessible than traditional telephone hotlines. A potential whistleblower can easily install the reporting app on their own device and make a report from anywhere in the world at any time of any day.

Conversations made in an app are encrypted, secure and private compared to talking over a landline or using a web-based reporting system, providing much-needed assurance to whistleblowers who are afraid to report misconduct to colleagues for fear of retaliation.

Affordability

Managing a human-serviced hotline system requires a lot of human and financial resources to maintain. The cost of an international call to file each report may not be sustainable, especially if, for example, the reporter is located in Asia or Africa while the compliance team they report to is located in the United States. For app-based hotlines, there is no financial burden of setting up and maintaining numerous local and international phone numbers (which for many companies can be over 100 globally).

Employees install the app themselves, meaning there are no implementation costs, and there are no user fees for employee and third-party use. This alone is sufficient reason to change your reporting system right away.

Multilingual capabilities

Reports filed from one person to another are almost always distorted, particularly if the reporter and the person responding do not speak the same first language. Translating or trying to make sense of a report takes so much time that companies cannot act on a report promptly.

App-based reporting systems, however, can be simply set to the reporter’s local language, with the chatbot leading the conversation and guiding them through the process – just like a human would – in that language. Reports are automatically translated as they are submitted, eliminating translation delays.

Tailored configuration

Unlike landlines or other telephone hotlines, app-based reporting systems can be configured to meet each company’s structure and reporting needs. App-based hotlines have smarter workflows and interview questions, and misconduct categories, questions and wordings that can easily be changed based on the organisation’s requirements and policies – not something that can easily be done with a landline hotline.

Adaptability

Due to tightening local data-protection laws, such as the European Union’s Data Protection Directive and its soon-to-be successor, the General Data Protection Regulation, processing data using a telephone hotline poses many challenges compared to an app-based system.

App-based hotline systems can easily store data within a local server and can be set to stay compliant with the requirements of local data-protection laws.

The Red Flag Group® is a business intelligence and technology firm that helps clients make better decisions in selecting key stakeholders. We create customised and integrated compliance and risk solutions that add value to our client’s businesses.